Brewer attorney asks for Medicaid lawsuit dismissal

The lawyer for Gov. Jan Brewer asked a judge late Friday to block dissident lawmakers from challenging the vote of the majority of their colleagues to expand Medicaid in Arizona.

Brewer contends the 36 legislators lack legal authority to advance their claim that key provisions of the expansion plan are unconstitutional. That specifically includes imposing what amounts to a tax on hospitals — the governor calls it an “assessment” — to pay to add or restore coverage to potentially 350,000 low-income Arizonans.

The challengers point out that a state constitutional provision requires a two-thirds vote of both the 60-member House and 30-member Senate for any increase in taxes. But the legislation gained barely a majority of each chamber.

More to the point, attorney Christina Sandefur of the Goldwater Institute, representing those opposed to the plan, said approving the measure with a simple majority effectively nullified the votes of those opposed. That’s because they make up more than a third of both the House and Senate, enough to effectively veto the plan.

The governor’s lawyer is sidestepping that legal question, at least for the moment. Instead, Douglas Northup contends the legislators have no legal right to sue in the first place.

In essence, Northup wants Maricopa County Superior Court Judge Katherine Cooper to rule that the only entities with legal “standing” to sue are the hospitals who would be subject to the tax.

But the governor, in a political maneuver, effectively ensured the hospitals would remain on the sidelines. That’s because she structured the levy in a way so every hospital chain would actually make money from the deal.

Cooper gave no indication when she will rule. But there is a deadline of sorts: The challenged expansion plan is set to take effect on January 1.

If Cooper sides with expansion foes, that paves the way for arguments about that underlying legal question of whether a two-thirds vote is needed. But a ruling for Brewer would not end the case, as the opponents are virtually certain to appeal.

The reason the hospitals are not opposing the tax they are being forced to pay has to do with how Brewer structured the expansion.

Arizona now provides health insurance to everyone up to the federal poverty level, a figure about $19,530 a year for a family of three. The federal Medicaid program picks up about two-thirds of the cost.

The only exceptions are childless adults whom Medicaid does not require be covered, even if they are living in poverty. The state had provided care but stopped enrolling new adults several years ago in a budget-cutting maneuver.

Brewer is taking advantage of the federal Affordable Care Act. It has Washington pick up the cost of expanding coverage to an adjusted figure of 138 percent of the poverty level, at least for the first several years.

Arizona, however, has to restore coverage for about 240,000 childless adults and pay its one-third share.

To get the money, Brewer got lawmakers to approve the assessment on hospitals. Figures from the Arizona Health Care Cost Containment System say that will raise about $75 million in the first six months.

But AHCCCS produced studies showing expanded coverage will bring in $108 more that in insurance coverage, cost the hospitals would otherwise have to write off as uncollectable. That is why the hospitals came out in support of the plan — and are not challenging the levy.

Sandefur, however, said the nullification of the dissident lawmakers’ votes — she argues unconstitutionally — gives them the right to challenge the expansion plan as illegally enacted.

That two-thirds requirement is not the only legal issue.

Sandefur pointed out that the legislation does not spell out how the tax or assessment is to be imposed. Instead, it gave AHCCCS Director Tom Betlach total power, without legislative oversight, to determine who should be charged and how much.

Betlach clearly used that discretion. Most notably, the plan he crafted ensured that the Mayo Clinic in Scottsdale will pay nothing at all.

Mayo lobbyists had threatened to oppose the plan during the session for financial reasons. They contended their client, with few uninsured patients, stood to gain very little through an expanded Medicaid program.

Monica Coury, the AHCCCS deputy director, said there were no promises made during the legislative session to either hospital to get them not to oppose the expansion.

Senate President Andy Biggs, one of the foes of expansion, conceded that winning this second legal argument about the authority to delegate the power to impose assessments could come back to bite the Legislature.

Lawmakers have routinely granted state agencies such power in the past. For example, they have given broad discretion to the Environmental Quality to set fees to cover costs.

Biggs said a ruling by Cooper that this delegation is illegal would void such arrangements. But he said that is not necessarily a bad thing, saying lawmakers should probably have better control over revenues raised by state agencies.